Bolsa Família turns ten

On October 20th Bolsa Família, the flagship anti-poverty programme launched by the former president, Luiz Inácio "Lula" da Silva (2003-10), in 2003 celebrated its tenth birthday. This came amid criticism over the programme's limited long-term impact on human capital development and on offering a permanent way out of poverty, something that requires better education and training.

The programme built on previous plans implemented under the administration of a former president, Fernando Henrique Cardoso (1995-2003), including the Bolsa Escola (which was instrumental in achieving over 90% enrolment rates in primary education for the first time). In a similar way to other conditional cash transfer (CCT) programmes pioneered in Latin America, the programme linked financial support for poor families to children's healthcare and education, with a view to fighting poverty in the short term (by boosting poor households' income), as well as promoting the development of human capital, providing deprived children with the instruments to compete better in the labour market. It is now the largest programme of its kind in the world, largely credited with having played a key role in the dramatic reduction in poverty and extreme poverty observed in Brazil in recent years—not to mention in Lula's re-election in 2006, despite the onset of the "Mensalão" vote-buying corruption scandal.

A few numbers

Bolsa Família expanded its scope from 3.6m households to 13.8m (almost 50m people) in 2003-13, with total government expenditure of R18.5bn (US$8.5bn) this year (from R570m in 2003). The programme represents a modest burden for the public finances, accounting for less than 0.5% of GDP. It has reached, since its inception, around one-quarter of Brazil's population. The programme has been scaled up by the president, Dilma Rousseff, with the launch of the Brasil Sem Miséria (Brazil without misery) plan in June 2011, aiming to lift 16.2m citizens out of extreme poverty through CCT initiatives, better access to education, healthcare, welfare, sanitation and electricity, and productive inclusion. It is targeted at Brazilians living in households with monthly incomes of R70 (US$35) or less per person, mainly located in the north-east region and rural areas. The Brasil Sem Miséria plan was expanded again in May 2012 alongside the Brasil Carinhoso (Brazil that cares) plan, which targets Brazilian families with children under the age of six living in extreme poverty, and will directly benefit close to 2m families.

Positive impact on poverty alleviation

There is widespread consensus on the positive impact of the programme on poverty reduction. A recent study by the Instituto de Pesquisa Econômica Aplicada (IPEA, a government think-thank) found that among seven social programmes, Bolsa Família generated the most positive externalities, producing additional GDP growth of R1.78 for each R1 invested. Its targeting of the lowest income households and the poorest regions made it effective in fighting poverty and income inequality, as well as enabling the emergence of a larger middle class in the country. According to IPEA, the number of people living in poverty and extreme poverty decreased from 19.1m and 7.6m to 15.7m and 6.5m respectively between 2002 and 2012, bringing the rate of extreme poverty down to 3.6%. Nominal per head incomes of households in the lowest income decile more than doubled in the same period. IPEA also found that, although 55% of inequality reduction in 2002-12 could be traced back to increased wages, 12% was attributable to CCT programmes.

But challenges remain

Despite the positive effects underlined above, the programme has not been exempt from criticism. In particular, the fact that in its ten-year existence, only 12% of the beneficiaries have left the programme after having substantially and sustainably boosted their income is a cause for concern. Indeed, it points to the minor impact of the programme on long-term poverty and on enabling social mobility based on better human capital. The government is aware of the need to engineer a way out from the programme better, and has focused on technical and vocational training as the key tool in this respect, setting a goal of 1m Bolsa Família beneficiaries being trained by the end of 2014. A version of the Programa Nacional de Acesso ao Ensino Técnico e Emprego (Pronatec, a vocational training programme) for Bolsa Família beneficiaries has been created and is being managed directly by the Ministry of Social Development as opposed to the Ministry of Education, which manages the Pronatec. According to the social development ministry, so far this year, just under 270,000 programme beneficiaries enrolled in 416 vocational courses within the Pronatec.

Moreover, efforts are being directed at promoting entrepreneurship within the programme beneficiaries, given that at the moment just 7.3% of the Microempreendedores Individuais (MEIs, a programme implemented in 2008 to promote formal micro-entrepreneurship) comes from the Bolsa Família beneficiaries. On a positive note, 72% of beneficiaries between the ages of 25 and 59 work in the formal or informal sector at the same time that they receive the Bolsa Família subsidy, displaying a lower unemployment rate than those that are not part of the programme. According to the social development ministry, in rural areas the ratio is 62.6% to 56.3%; in urban areas, 55.5% to 48.6%; and in metropolitan areas, 52.3% to 42.7%.

A better focus on education and training will be crucial to ensuring further reduction in poverty and income inequality, and to building on the successes achieved by Bolsa Família and past anti-poverty programmes in the country. We expect this to remain at the centre of the government's agenda, driven by growing demand from an increasingly vocal civil society.